Director of Policy and Enforcement for Xbox LIVE, Stephen Toulouse, recently posted on his blog
a basic and clear reasoning for banning users who create swastikas as part of their online personality on Xbox Live after he was asked by a user over Twitter "Hey, I’m not a genocidal hater of Jews but I really love the design of the swastika because its actually used by numerous religions, can I use it as my Call Of Duty: Black Ops logo?" to which he responded "no, of course you can’t, we’ll ban you".
To clarify further, Toulouse explained that while he understood the symbol itself has various meanings across a wide array of religions, in modern context, it is simply inappropriate to use as part of an avatar or online persona.
Let’s be clear: no educated human on the planet looks at the swastika symbol on a video game service in “the year we make contact” and says 'oh, that symbol has nothing at all in any way to do with global genocide of an entire race and, even if it did, one should totally and reasonably ignore that because it’s a symbol that was stolen or coop-ted from religions."
The full blog post is pretty interesting, but his stance is clearly one based on common-sense, and having come across players online with said Swastika, I'm inclined to agree with that stance. But let's open the floodgates, what do you think?